afaqs!

The Future of News 2009: Underpriced, overpriced or well-priced?

By Abhishek Chanda , afaqs!, New Delhi | In Media | August 03, 2009
In the second session of this year's edition of The Future of News, panellists debated on why news channels manage to attract a major chunk of the TV ad spends, even when they attract a relatively small number of eyeballs

The second session of this year's edition of The Future of News saw panellists debating on why news channels get a higher revenue share of the TV ad pie, on a relatively smaller audience share. The panel also explored the learning for other media formats from this behaviour, as well as whether the proliferation of news channels signals a large unmet need for news in the market.

The session was moderated by Joy Bhattacharya, director, Kolkata Knight Riders and chief executive officer, Ignitee Sports. The panel comprised Ashish Bhasin, chairperson, India and CEO, Southeast Asia, Aegis Group; Ashok Venkatramani, CEO, MCCS; Neha Lidder Ganju, senior marketing manager, Virgin Atlantic India; Ruchira Raina, managing director, Dentsu Communications and Dentsu Media; and VS Mani, senior vice-president and general manager, Lintas Media Group (LMG).

& #BANNER1 & #

Bhattacharya began the session with an apt description of the panel - it had Bhasin, Lidder, Mani and Raina, who consume or buy news; while on the other hand, it had Venkatramani, who sells news.

The first topic of discussion was whether news is underpriced, overpriced or just well-priced. Bhattacharya threw the question at Raina, who agreed that news today is definitely much lower priced than the typical GEC.

However, she said that the important thing is the value quotient, rather than the price.

Raina cited an example from a recent online global survey conducted by Nielsen, which had responses from many Indians as well. One of the findings of this survey was that 93 per cent of consumers were buying brands because of word of mouth, and 87 per cent were buying because they saw the ad for the brand on a news channel. The fact that they saw it on a news channel led them to believe more in the communication than if they had seen it on any other channel.

Mani from LMG said that it all depends on the kind of audience one wants to reach out to. If it's a male audience, news channels are quite relevant. He cited the example of the financial category, which used the news channels heavily before the financial crisis.

However, he thought that the pricing of news is a combination of being underpriced and being overpriced, too, keeping in mind different audiences and different news channels. He says, "Sometimes you pay more and sometimes it's a steal."

Lidder of Virgin Atlantic opined that the pricing of news is balanced right now, keeping in mind the brand she represents and the type of consumers they reach out to. She pointed out that Virgin, as a brand, is itself a newsmaker and uses news to market itself to a large extent.

Bhasin seconded Lidder's opinion, but added that in a free market, it's always rightly priced and nothing can stay underpriced or overpriced for a long time - it slowly gets balanced out. However, to him, the value of the content and the environment it is getting exposed to was more important than the price. He cited an example, saying that he would think before paying even Re 1 for a spot for a financial product coming after a large news clip on Rakhi's Swayamvar.

Venkatramani expressed a divergent opinion, stating that news is definitely underpriced and undervalued. He said, "To borrow from the title of this session, I would say news is not sold well enough, probably because it is not thought through well enough."

At this point, Bhattacharya queried whether news gives the brand any chance to figure out what environment it will be exposed to, because news itself is so unpredictable. "For example, if one buys a sports channel, he knows that the brand will be associated with fun, thrill and action. But with news, one doesn't know when a 26/11 could occur or an Olympic bronze would be scored," he stated.

Bhattacharya then asked Raina whether news allows the advertiser to buy what one wants. She answered, "News channels still give you the ability to device the content, which is not just a 'on your face' advertising spot but can be woven into the credibility/reliability that the news genre offers."

Next, Bhattacharya asked the panel whether credibility and ratings are going hand in hand. Lidder felt that credibility and ratings are not going hand in hand. To explain this further, she took the example of Virgin as a brand, which focuses on selling the front or the back of the airplane.

She said, "If we are talking to the passenger at the front of the plane, then the choice would be of a programme that is not massively viewed, but viewed by the right kind of passenger. Again, for the person at the back of the plane, it will be more about various combinations and a more pricing driven strategy."

Mani said that it had more to do with separate attitudes and treatment for separate brands that are speaking to their own sets of consumers, because after all, not all channels enjoy the same amount of credibility.

Bhattacharya's next question to Venkatramani was that considering that news events are unpredictable, how are spots managed and balanced according to the delicate nature of the event that is unfolding?

Venkatramani replied, "There is a fundamental difference in the way news channels are bought (as compared to other channels). Unlike other channels, which are bought on the basis of soaps, serials and reality shows or sporting events, news channels are bought on the basis of the brand name."

Explaining this, he said that when there is breaking news - which may be positive, such as a cricket win or an election result; or negative, such as a shootout or a bomb blast - it is then that a news channel builds credibility for the brand name, instead of making money.

"Buying a GEC is like going to a retail outlet and buying a branded shirt or jeans, paying the full price for it, but buying news is like going for the buy during a sale or in a discount scenario. You just have to be lucky to get the right deal, but the person is mentally prepared for that," he added.

Bhattacharya then asked whether sports and entertainment news, amongst the general news content, tends to attract more money.

To this, Bhasin said that he largely agrees with Venkatramani that an advertiser wants to have a long term association with news channels based on its credibility. However, in some cases, sports or entertainment news might be priced higher, but not always.

Bhattacharya's last question probed the long argued fact that English news, as compared to Hindi or regional news, is running away with most of the investment as well as the attention.

Mani agreed that English news does attract a lot of investment and attention, especially because for the viewer of this format, the marketer doesn't mind investing a huge sum.

Bhattacharya probed further by asking that when the same CEO or decision maker is also consuming popular Bollywood films, why is there a preference for English when it comes to news?

On this, Bhasin said that it's a badly kept secret in the advertising industry that a lot of decision makers unconsciously - both at the agency and at the client level - tend to attach credibility to English news because they are comfortable with the language.

However, Venkatramani strongly disagreed with this, saying that the panel is being too harsh on the buyers and the advertisers. Citing an example from his HUL days, he said that the CPRP of Dove is higher than the CPRP of Lux. It was because one had to pay a price to reach out to the niche audience for Dove. However, there may be a few exceptions.

Venkatramani also agreed that there is data to prove that English channels reach out to a higher number of decision makers.

The Future of News was held at The Oberoi, New Delhi on July 31. The event was organised by afaqs! and sponsored by STAR News, Hindustan Times and Mint.